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Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) – Collateral Free Loan

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is a government-
backed trust established to facilitate access to credit for Micro, Small, and Medium Enterprises (MSMEs) in India. It does this by providing credit guarantees to lending institutions, which reduces the risk associated with lending to MSMEs. This enables MSMEs to obtain loans without the need for collateral or third-party guarantees, thereby boosting their access to finance. The CGTMSE scheme aims to promote entrepreneurship, job creation, and economic growth in India.

1. Who Can Apply

  • Individuals, Proprietorships, partnerships, private limited companies, or registered
    companies.
  • Any existing business that falls under the
    micro or small enterprise category, as defined by the MSMED Act, 2006.
  • Individuals who are planning to start a new micro or small enterprise.

2. Which Projects Are Eligible Under CGTMSE

This includes a diverse range of industries, from traditional manufacturing
to high-tech production.

This covers a broad spectrum of service-based businesses, such as retail,
hospitality, IT services, healthcare, education, and more.

Businesses engaged in the wholesale trade of goods are eligible.Manage cash flow better by having funds available when needed.

This includes activities like fishing, poultry, dairy farming, and agricultural
processing.

3. Benefits

The margin rate percentage under the CGTMSE scheme is 10%. This means
that the borrower needs to contribute 10% of the loan amount as collateral or security.

CGTMSE enables MSMEs to access loans without the need for collateral, which can be a significant barrier for many small businesses.

The documentation process for CGTMSE loans is relatively
simple, reducing the administrative burden on MSMEs.

Loans under CGTMSE are often disbursed faster compared to
traditional loans, allowing MSMEs to access funds quickly to meet their working capital and investment needs.

Due to the reduced risk for lenders, CGTMSE loans often come with
competitive interest rates.

The standard repayment period for CGTMSE loans varies based on the
type of loan (term loan or working capital) and the specific terms agreed upon between the
lender and borrower. However, it typically ranges from 5 to 7 years.